Drugstore chain Walgreens Boots Alliance (WBA) announced it is going private in a $10 billion deal with private equity firm Sycamore Partners. Sycamore will pay $11.45 per share, which is a premium of 8% to the stock’s closing price of $10.60 on Thursday. The total value of the deal is up to $23.7 billion. Sycamore Partners specializes in retail and consumer investments and has a track record of buying distressed retailers for profit, like Staples, Talbots, and Nine West.
Walgreens’ shareholders could also receive up to $3 in cash per WBA share from the future monetization of the company’s debt and equity interests in VillageMD, which includes the Village Medical, Summit Health, and CityMD businesses.
Utilizing WBA’s healthcare expertise and Sycamore’s established leadership in retail and consumer services, WBA will be better positioned to become the first choice for pharmacy, retail, and health services. And the company will continue to operate under Walgreens, Boots, and its trusted portfolio of consumer brands. WBA will maintain its headquarters in the Chicago area and continue contributing to the communities in which it operates to positively impact the health outcomes and overall well-being of its customers, patients, communities, and team members.
The WBA Board of Directors, with WBA’s Executive Chairman Stefano Pessina and John Lederer recused from the deliberations and approval, has unanimously approved the proposed transaction. The deal is expected to close in the fourth quarter of the calendar year 2025, subject to customary closing conditions, including approval by WBA shareholders (including a majority of votes cast by WBA shareholders unaffiliated with Pessina or Sycamore) and the receipt of required regulatory approvals. The transaction is not subject to a financing condition, and Sycamore has received fully committed financing.
Sycamore and WBA also entered into voting and reinvestment agreements with Pessina and his holding company, who, in the aggregate, own approximately 17% of WBA’s shares of outstanding common stock. Pessina and his holding company will vote all of their shares of WBA common stock in favor of the deal, subject to certain terms. Pessina and his holding company will receive one DAP Right per share of WBA common stock they own and will have approximately 17% of the DAP Rights following the closing of the Sycamore transaction.
Centerview Partners is acting as financial advisor, Kirkland & Ellis is acting as legal advisor and Ropes & Gray is acting as healthcare regulatory counsel to WBA. Morgan Stanley was also a financial advisor, and provided a fairness opinion to the WBA Board of Directors.
UBS Investment Bank is acting as lead financial advisor, Goldman Sachs and J.P. Morgan are acting as co-lead financial advisors, Citi and Wells Fargo are acting as financial advisors, Davis, Polk & Wardwell is acting as legal counsel and Bass Berry & Sims PLC is acting as healthcare regulatory counsel to Sycamore Partners.
Debevoise & Plimpton is acting as legal advisor to Stefano Pessina.
KEY QUOTES:
“Throughout our history, Walgreens Boots Alliance has played a critical role in the retail healthcare ecosystem. We are focused on making healthcare delivery more effective, convenient and affordable as we navigate the challenges of a rapidly evolving pharmacy industry and an increasingly complex and competitive retail landscape. While we are making progress against our ambitious turnaround strategy, meaningful value creation will take time, focus and change that is better managed as a private company. Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds. The WBA Board considered all these factors in evaluating this transaction, and we believe this agreement provides shareholders premium cash value, with the ability to benefit from additional value creation going forward from monetization of the VillageMD businesses.”
“Our trusted brands and deep commitment to our customers, patients, communities and team members have and will continue to anchor our business as we realize our goal of being the first choice for pharmacy, retail and health services. I am grateful to the more than 311,000 team members globally who are fiercely committed to WBA, our customers and patients.”
- Tim Wentworth, Chief Executive Officer, Walgreens Boots Alliance
“For nearly 125 years, Walgreens, and for 175 years, Boots, along with their portfolio of trusted brands, have been integral to the lives of patients and customers. Sycamore has deep respect for WBA’s talented and dedicated team members, and we are committed to stewarding the Company’s iconic brands. This transaction reflects our confidence in WBA’s pharmacy-led model and essential role in driving better outcomes for patients, customers and communities.”
- Stefan Kaluzny, Managing Director of Sycamore Partners
